tax preparer beat expectations for the fourth quarter. The stock is up over 5% since releasing fourth quarter results Wednesday before the market open. H&R Block shares closed at $32.36 on Thursday.
For Q4, H&R Block reported net income of $3.29 per share, up 36% from $2.42 per share a year ago. Revenue grew 16% to $2.56 billion. Analysts surveyed by Thomson Reuters expected net income of $3.23 per share on revenue of $2.49 billion.
H&R Block's New Strategy Paying Off
This quarter H&R Block set its focus on more profitable customers, serving fewer customers and still increasing in revenue growth. This new strategy has been implemented along with changes to the company’s pricing strategy, improvements to its online digital tax software and increased Tax Plus financial services product revenues.
The fourth quarter results were crucially important. H&R Block had reported losses in all prior three quarters. However, the tax business has a high degree of seasonality. The final quarter netted 81 percent of total revenues for the year.
"We delivered a strong year of both revenue and earnings growth and lived up to our long-standing tradition of being the world's leading tax services provider," H&R Block’s President and CEO Bill Cobb said in a statement.
Opportunities for H&R Block Going Forward
H&R Block’s opportunities are continuing to expand, aided by a disjointed industry and a lack of tax preparer regulation. Many of H&R Block’s opportunities are due to recent changes in the healthcare system. During an interview with CNBC’s Jim Cramer, Cobb stated that a successful advertising campaign also made a crucial impact with customers.
With 10,300 locations, 80,000 tax professionals and options to help customers do their taxes online, H&R Block is the largest tax preparer in the world. Last year the Kansas City, Missouri-based company filed 24.2 million tax returns, one in six of all tax returns within the United States.
"Though we anticipated an overall decline in return counts, our Tax Plus strategy is working, and we will continue to focus on enhancing the client experience and delivering best-in-class products and services to drive profitable growth,” Cobb added. “Our improving client satisfaction scores are a testament to the value we bring to our clients, positioning us well for 2015 and beyond.”
By Jessica Beeli
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